Chain of Title (10 page)

To shine hope through the darkness,
Living Lies
users passed around positive court rulings, which popped up with increasing regularity in 2009, illustrating that the walls protecting banks had begun to creak. In Miami,
Ana Fernandez had her foreclosure sale vacated on February 11 (just days before Lisa got served) because Chevy Chase Bank could not prove it held the promissory note.
Samuel Bufford, a federal bankruptcy judge in California, began to demand valid documentation in any case involving securitized loans.
Judge Walt Logan in Pinellas County, Florida, stopped accepting any foreclosures precipitated by MERS. New York State Supreme Court justice Arthur Schack of Brooklyn halted numerous foreclosure cases with irregularities as varied as the same representative signing documents on behalf of two different banks in the same case, or a bank initiating foreclosure before they owned the loan—symptoms of securitization FAIL. Over a two-year period, Judge Schack rejected 46 of 102 foreclosure cases that came before him.
“If you are going to take away someone's house,” Schack told the
New York Times
, “everything should be legal and correct.”

But
Living Lies
commenters were also tempered by pervasive horror stories about people who did everything right and played by the rules. In August,
Anna Ramirez of Miami came home to find all her belongings out on the lawn and a stranger telling her to get off the property. Without warning, Washington Mutual sold her home at auction; she had never missed a payment. Miami-Dade County police officers tossed out the family, who had to collect their things and stay with friends for a few nights while Ramirez explained the situation to a judge. The bank eventually claimed the sale was a “mistake.” Across town, physical therapist
Tony Louzado was
fighting two separate law firms, each one suing him on the same note, with both plaintiff banks asserting standing to foreclose.

These scenarios should be impossible. When borrowers close on a mortgage, they sign dozens of documents designed to verify chain of title, document exactly how much the borrower will pay every month, and detail what happens in event of late payment or default. The mortgage and the note get filed at the county recording office. The borrower receives title to the property and even purchases title insurance to guard against defects in establishing ownership. There should be no question about the owner of the loan, the purchaser of the mortgage, and the very detailed steps of the process, all put into fine print in a binding contract.

When multiple lenders filed foreclosures on the same note, or when a bank tried to auction a home when the borrower never missed a payment, it spoke to a deep rot in the property records system. If Lisa Epstein showed up at the courthouse claiming to own someone's home, the judge would sanction her. If a bank did the same, with no more reliable evidence, why should they get a free pass?

Cranks and naysayers liked to complain about foreclosure victims trying to get “free homes” on a technicality. Trolls would jump into the comments all the time, screaming about subsidizing deadbeat homeowners, demanding that they “pay up or move out.” But the gang at
Living Lies
did not think they deserved free homes. They wanted to stop a chaotic, error-filled process, because without standards, anyone could get caught in the eviction trap, even those naysayers. And anyway, there was a little something called the rule of law. To argue that it didn't matter whether documents were accurate as long as the homeowner didn't pay the mortgage was like saying as long as the murder suspect was guilty, it didn't matter whether the cops planted the gun on him.

One day that summer,
someone with the username “Fraud in FL” commented on a story about MERS, “I have been working with my servicer WAMU (Washington Mutual) to prevent foreclosure but now they have turned it over to Florida Default Law Group and had MERS assign my mortgage over to JPMorgan Chase to begin the foreclosure process. The problem I have is the ‘Officers' of MERS that did the assignment are actually
employees of JPMorgan Chase.” The original lender, AmNet Mortgage, transferred the mortgage to Chase on April 20, 2009—a notable activity, since AmNet was out of business at the time. The commenter said he found the signing officers on his document, Chase employees, acting as MERS vice presidents on behalf of several other lenders in county databases. “In my opinion there is some major fraud going on here,” Fraud in FL wrote.

Lisa replied within two minutes. “My story is so similar to yours,” she said, noting the presence of MERS and Florida Default Law Group. “How did you look up the court records on the mortgage?”

Alina Virani, a paralegal and frequent commenter, stepped in to counsel Lisa. “You can search your county clerk's website,” she wrote, pointing her to the recording office where public documents are kept. Lisa didn't know documents were available outside the courthouse. This meant she could continue her research anywhere with an Internet connection. Lisa immediately clicked onto the website for Palm Beach County's clerk of courts, discovering she could examine dockets and official records, including assignments of mortgage and deeds of trust. She couldn't search every document filed in a case, like the affidavits. But this would be a tremendous time- and money-saver.

“It looks like Alina answered your question,” Fraud in FL wrote back the next day. “Let me know if you want to trade notes. Knowledge is power . . . Michael.” Lisa replied with her email address, and she and Michael began to correspond.

Meanwhile, Florida media began to uncover foreclosure problems. Susan Martin of the
St. Petersburg Times
published an exposé of Nationwide Title Clearing, a document processing company inexplicably owned by the Church of Scientology. Martin unearthed documents from Brian Bly, an employee at Nationwide Title Clearing, alternately signing as vice president of Option One Mortgage, Deutsche Bank, and Citi Residential Lending. Martin tracked Bly down to a trailer park in Clearwater. Along with his coworker Crystal Moore, they signed dozens of mortgage assignments in the Tampa Bay area, as per corporate resolutions that authorized them to sign for various lenders and “fix” document issues.
“They may sit there all day for a week and sign,” admitted Jeremy Pomerantz, Nationwide Title Clearing spokesman.

Michael, the “Fraud in FL” commenter, left a message on Susan Martin's story explaining how widespread the practice was, in his experience, and not limited to Nationwide Title. Susan Martin wrote back and even tracked him down at
Living Lies
, asking for more information.

Throughout the summer, Lisa traded motions in her case with Florida Default Law Group, seeking discovery of documents. She also tried to strike Whitney Cook's affidavit of amounts due and owing, on the grounds that Cook represented JPMorgan Chase in the affidavit but MERS on the mortgage assignment.
Florida Default Law Group withdrew that affidavit and then filed one with all the same information, this time signed by someone named Beth Cottrell. On LinkedIn Cottrell identified herself as an employee of JPMorgan Chase, but in the document she signed as a vice president of Chase Home Finance, a separate legal entity. So Lisa found another moonlighter working in a high-level capacity for multiple corporations. She added Beth Cottrell to her list of searches.

For Lisa, the day began at 6:00 a.m., three hours after going to bed. She would race to the computer to check the news, hoping to find a big headline, “Foreclosure Fraud Uncovered.” Then she'd get Jenna up and ready for day care, intermittently checking headlines and blogs. A drive to the babysitter and back to the cancer center, maybe logging on to check foreclosure sites there, a bout of daydreaming about legal strategies in between caring for patients, seven minutes to the courthouse, forty-six minutes in the courthouse, seven minutes back, another check of the blogs, wrap up at work, run public records searches, pick up Jenna, a quick dinner, sit Jenna in front of the TV while researching securitization, cries of “Momma, come over here” and replies of “Just a minute, Jenna, just a minute, Jenna” until bedtime, after which more reading, more writing, more research, more learning, until three in the morning. Foreclosure news and information consumed Lisa's life the way a virus invaded the body.

Lisa regretted missing Jenna's childhood. And she couldn't focus on patients with the compassion and tact the job demanded. The nurturing side, the unspoken bond with her patients—that became harder, as something new always drew away focus. The computer beckoned her, the knowledge sustained her; a little voice told her to learn and fight and enlist others to stop the tragedy. And it never shut off.

Just after the Fourth of July, Lisa got a voicemail from a patient named Robyn Powell. Doctors discovered a tumor in Robyn's brain in 2006, while she was being treated for injuries suffered in a head-on auto collision. The subsequent illness, marital breakup, and long recovery wrecked her pool-cleaning business and left her well behind on mortgage payments. Robyn told Lisa she got a note from her servicer, Saxon Mortgage, informing her of an imminent hearing. “I'm calling to ask if you know any homeless shelters, because I could lose my house next week,” Robyn said, her speech slightly slurred due to recovery from the tumor. Robyn had no income besides her disability benefit, and nowhere for her and her teenage son to go.

Lisa looked up the case file at the courthouse. The servicer's law firm, Shapiro & Fishman, filed a motion for summary judgment, which would eliminate all Robyn's options to save her home. But the case looked as muddled as every other. Saxon filed a lost note affidavit and didn't seem to have documented proof that it owned the mortgage. Lisa thought Robyn could at least get an extension, given the questions in the case as well as Robyn's handicaps. “It's going to be scary, but I think we could get the eviction delayed if we show up and challenge it,” she told her. Lisa couldn't argue the case for Robyn, so instead she wrote a letter for Robyn to read in court. The two practiced for hours, working through Robyn's slurred speech. Robyn was nervous, but she agreed to go to the trial on one condition: Lisa had to come with her.

On July 15, 2009, Lisa, fresh from the hospital and decked out in scrubs, guided a limping Robyn into courtroom 4A. She stood by Robyn's side as Judge Meenu Sasser called the case. Robyn gingerly reached the podium and took out Lisa's letter, while Lisa tensed up with a mixture of pride and fear. But before the case began, Judge Sasser asked, “Where are the plaintiffs?” The local lawyers for Shapiro & Fishman, a statewide firm, never showed up. Judge Sasser asked if Robyn had her own lawyer, and Robyn glanced over at Lisa before saying no. But Robyn added that she wanted to make a statement. She recited Lisa's letter to the judge word for word.

Lisa had Robyn request an extension under the Americans with Disabilities Act, explaining her tragic story to the judge. If the extension could not be granted, Lisa's letter pivoted to a robust opposition to the motion for summary judgment, objecting to most of the material facts. “I dispute that I owe this plaintiff any money. . . . I dispute paragraph 7 of plaintiff's
motion claiming this is a purchase money mortgage, when clearly it was a refinance. . . . I dispute that this plaintiff filed the original note with its complaint, as is required by Florida state statute,” Robyn slowly read. Lisa contended that the obligation to pay was unenforceable and unsecured under standard contract law, that the servicer had no standing to foreclose, that the plaintiff did not hold the promissory note, and that the chain of title had been broken because the plaintiff never recorded assignments of mortgage or endorsed the note. She asked for an extension of “90–120 days from the day plaintiff provides the original note, proof that it is indeed holder in due course, evidence of the recording of the entire unbroken chain of assignments, and a full accounting of each and every payment I made.” It was a neutron bomb of a statement, the kind only a nonlawyer acting in her own defense could get away with, and even then not so much. The chatter in the courtroom, typically constant, faded away, with the crowd actually hanging on every word.

Judge Sasser paused for longer than a beat and then explained calmly that, due to lack of plaintiff's counsel, she would deny summary judgment. She added that she would make arrangements to get Robyn a legal aid attorney to help with the case in the future. For now, Robyn would get to stay in her home. Lisa didn't recall her feet touching the ground on her trip back to the chemo center.

Lisa grew frustrated with the
Living Lies
website. It provided great information, but even experienced users found it hard to locate resources among the massive, haphazardly arranged topic list. Comments on posts would often not appear for days, and sometimes they would show up on a different page. It was hard to participate fully in a fast-moving discussion.

Lisa also had trouble keeping up with requests for help on foreclosure cases from friends, acquaintances, and random strangers. She would get a steady trickle of texts, emails, and letters. A homeowner with questions about his documents once addressed correspondence to Lisa at the county courthouse; the file room clerk handed her the mail. There wasn't enough time for Lisa to respond to everyone personally; even a law firm couldn't take every case, let alone a single mom with a nursing job. But Lisa did feel that millions of people in foreclosure needed guidance to help find what
they needed. She imagined a clearinghouse with easy-to-understand resources and knowledgeable people ready to answer questions.
Living Lies
was not that place.

Alina Virani started an email group for attorneys, paralegals, experienced homeowner victims, and
pro se
litigants. Lisa was invited, along with Michael, aka “Fraud in FL.” A paralegal with a real estate background, Alina encountered foreclosure complaints in her daily work and thought they were completely subpar, with critical documents missing and written arguments contradicting themselves in the space of a few paragraphs. On the email group, participants could share press clippings, research, and case law in one place, aiding attorneys who wanted to represent homeowners properly.